What to Avoid During your Home Purchase
What's more fun than getting a bunch of new stuff to adorn your future home? Not much. But making big purchases before your loan closes can be harmful. Until closing, there are still some hurdles to jump. Below you'll find a list of actions to avoid during this critical time of your home purchase.
Don't buy big-ticket items. You may be tempted to order that new easy-chair for the soon-to-be-yours living room, but it's best to stay away from making large purchases like furniture, appliances, electronic equipment, or vacations until closing. Financing new Plasma TVs with a store card or a bank credit card could jeopardize your credit worthiness during the time it means the most. Using cash to buy big-ticket items can even create an issue: most lending institutions take into consideration your available cash when approving your loan.
Don't get a new career. Your recent career history should show stability. Finding a new career (particularly one with a better salary) may not jeopardize your ability to qualify for your loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be bogged down.
Don't take your accounts to a new bank or move around your cash. Bank statements from recent months for your accounts (savings, checking, money market, and other assets) will probably be reviewed as the lending institution makes decisions regarding your approval. Your lending institution hopes to see a consistent rise and fall of your money over the month, in the interest of avoiding fraud. Changing banks or transferring funds to another account - for whatever purpose - may make it harder for the lender to review your funds.
Don't deliver earnest money directly to the seller in a FSBO (for sale by owner) purchase. Your good faith money does not belong to the seller: it remains yours until the transaction is final. Some FSBO sellers may not realize that any good faith funds should go toward your expenses upon closing. We recommend that you put the funds into a trust account, or get an attorney to hold them until closing. The disposition of earnest funds, if your sale falls through, should be documented in the contract with the seller.
Amity Mortgage LLC can answer questions about these "Don'ts" and many others. Call us: 2037296681.